Wednesday, May 05, 2010

Economics of Immigration Reform

Over two years ago I described how I think immigration has been and will continue to be the backbone of American growth. I attempted to disprove the racial, psychological, and economic arguments against opening immigration. In honor of Cinco de Mayo, here is the data to support relaxing immigration laws:
Modest savings in public expenditures would be more than offset by losses in economic output and job opportunities for more skilled American workers. A policy that reduces the number of low-skilled immigrant workers by 28.6 percent compared to projected levels would reduce U.S. household welfare by about 0.5 percent, or $80 billion.

In contrast, legalization of low-skilled immigrant workers would yield significant income gains for American workers and households. Legalization would eliminate smugglers' fees and other costs faced by illegal immigrants. It would also allow immigrants to have higher productivity and create more openings for Americans in higherskilled occupations. The positive impact for U.S. households of legalization under an optimal visa tax would be 1.27 percent of GDP or $180 billion.
Here's another article suggesting that immigration has increased non-immigrant wages:
For each percentage of the workforce that is foreign-born, he found an almost 0.5 percent bump in average wages. In California, where the percentage of immigrants in the workforce has jumped more than 25 points since 1960, that means an almost 13 percent bonus—roughly $8,000.
To show all sides, here is evidence that there is a negative impact on some, namely unskilled minorities, due to increased immigration. However, these poor workers are also consumers who benefit from immigration. They are also taxpayers, and more immigrants means more young workers. As America ages, that becomes more and more important, especially for the solvency of Social Security.

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